(Adds reaction from war crimes tribunal)
By Alexandra Hudson
THE HAGUE, Feb 26 (Reuters) - The highest U.N. court cleared Serbia on Monday of direct responsibility for genocide in Bosnia during the 1992-95 war, but said Belgrade had violated its obligation to prevent and punish the mass killing.
Bosnia had asked the International Court of Justice (ICJ) to rule on whether Serbia committed genocide through the killing, rape and ethnic cleansing that ravaged Bosnia during the war, in one of the court’s biggest cases in its 60-year history.
It was the first time a state had been tried for genocide, outlawed in a U.N. convention in 1948 after the Nazi Holocaust.
ICJ President Judge Rosalyn Higgins said the court concluded the massacre of Muslim men by Bosnian Serb forces at Srebrenica did constitute genocide, but that the Serbian state could not be held responsible for the mass killing, or complicity in the act.
A judgment in Bosnia’s favour could have allowed it to seek billions of dollars of compensation from Serbia.
"The court finds by 13 votes to 2 that Serbia has not committed genocide," she said after an almost three-hour ruling.
But the court also ruled that Serbia had failed to prevent genocide and punish the perpetrators. Bosnian Serb wartime leader Radovan Karadzic and military commander Ratko Mladic, both accused of genocide for Srebrenica, are still at large.
Some 8,000 Muslims from Srebrenica and surrounding villages in eastern Bosnia were killed in July 1995. The bodies of about half of them have been found in more than 80 mass graves nearby.
Judge Higgins said Serbia had flouted its obligations under the genocide convention by failing to arrest Mladic even though he was hiding in the country and said it must take immediate steps to transfer him for trial at the U.N. war crimes tribunal.
A spokeswoman for the tribunal’s chief prosecutor said she hoped the ICJ ruling would help maintain European Union pressure on Serbia to deliver Mladic for trial in The Hague.
Serbian President Boris Tadic told a news conference on Monday parliament should condemn the Srebrenica massacre.
"The very difficult part of the verdict is that Serbia did not do all it could to prevent genocide," he said.
The Serb legal team said the court had absolved Serbia of "the most difficult accusation in its history", but added: "We hope that this judgment will be an opportunity for the direct reconciliation of people in the former Yugoslavia."
Bosnian Muslims and Croats expressed disappointment at the ruling over the war in which at least 100,000 people died, three quarters of them Muslims and Croats. The court ruled that paying reparations to Bosnia would not be appropriate.
"This makes me cry. This is no verdict, no solution. This is a disaster for our people," said 60-year-old Fatija Suljic who lost her husband and three sons in the Srebrenica massacre.
"I am stunned. This is terrible — I saw with my own eyes who started this war and who kept up the aggression. It was the Serbs," said Hedija Krdzic, 34, who lost her husband, father and grandfather at Srebrenica and was demonstrating at the court.
The intent to commit genocide proved decisive in the ICJ’s ruling, with the court conceding that although other mass killings of Bosnian Muslims could well be war crimes or crimes against humanity, a specific intent by the Bosnians Serbs to destroy them could not be shown apart from in Srebrenica.
Although the court found Serbia "was making its considerable military and financial support available" to the Bosnian Serbs it had not known for certain they had genocidal intent, although it must have been aware of the risk of such an event.
The U.N. war crimes tribunal has already found individuals guilty of genocide at Srebrenica. Bosnia used evidence from trials there for its case against Serbia.
Bosnia’s Muslims and Croats followed Slovenia and Croatia in breaking away from Yugoslavia in April 1992, against the wishes of Bosnian Serbs, who were left as a one-third minority in what had previously been a Yugoslav republic ruled from Belgrade.
Backed by the Yugoslav army, the Serbs captured two-thirds of Bosnia and besieged Sarajevo. Tens of thousands of non-Serbs were killed and hundreds of thousands forced from their homes. (Additional reporting by Sarajevo, Belgrade and Brussels bureaux)